US sets – and quickly suspends – tariffs on UK and others over digital taxes

<span>Photograph: Reuters</span>
Photograph: Reuters

The Biden administration announced 25% tariffs on over $2bn worth of imports from the UK and five other countries on Wednesday over their taxes on US technology companies, but immediately suspended the duties to allow time for negotiations to continue.

The US trade representative, Katherine Tai, said the threatened tariffs on goods from Britain, Italy, Spain, Turkey, India and Austria had been agreed after an investigation concluded that their digital taxes discriminated against US companies.

The move underscores the US threat of retaliation, first made under the Trump administration, over digital-services taxes on US-based companies including Alphabet, Apple and Facebook, that has sparked an international row over which countries should have taxing rights over some of the world’s largest companies.

The US trade representative’s (USTR) office published lists of imports that would face tariffs if international tax negotiations fail to reach a solution. Goods from Britain worth $887m, including clothing, overcoats, footwear and cosmetics, would face a 25% charge as would about $386m worth of goods from Italy, including clothing, handbags and optical lenses. USTR said it would impose tariffs on goods worth $323m from Spain, $310m from Turkey, $118m from India and $65m from Austria.

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The potential tariffs, based on 2019 import data, aim to equal the amount of digital taxes that would be collected from US firms, a USTR official said.

The news came as finance leaders from G7 countries prepare to meet in London on Friday and Saturday to discuss the state of tax negotiations, including taxation of large technology companies and a US proposal for a global minimum corporate tax. US tariffs threatened against France over its digital tax were suspended in January to allow time for negotiations.

Tai said she was focused on “finding a multilateral solution” to digital taxes and other international tax issues.

“Today’s actions provide time for those negotiations to continue to make progress while maintaining the option of imposing tariffs under Section 301 if warranted in the future,” Tai said.

Tai faced a Wednesday deadline to announce the tariff action, or the statutory authority of the trade investigations would have lapsed.

A British government spokesperson said the UK tax was aimed at ensuring tech firms pay their fair share of tax and was temporary. “Our digital services tax is reasonable, proportionate and non-discriminatory,” the spokesperson said. “It’s also temporary and we’re working positively with international partners to find a global solution to this problem.”

Reuters contributed to this article